GOP touts lower premiums, but other insurance costs to rise

Republicans are touting lower premiums under their health care legislation, but that reflects insurance that would cover a smaller share of the cost of medical bills.

The fine print is getting lost in the translation.

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Consumers might pay less up front every month, but if you break a bone or get hospitalized for a serious illness, you could be on the hook for a bigger share of the bill.

Premiums under the Senate bill would average about 30 percent lower in a few years, the nonpartisan Congressional Budget Office said in its analysis this week. Overlooked is that the lower premiums envision a switch to "bronze" plans that now come with a $6,000 individual deductible, much higher than the current standard "silver" plan with a $3,600 deductible.

Another caveat: Not everybody would see lower premiums.

Insurers will be able to charge older adults up to five times more, compared with a three-fold difference under current law, the health care overhaul passed under former President Barack Obama.

Also, the GOP would give lower-income people less financial help from the government, which means many might not be able to afford coverage. Lower-income people get less assistance with premiums in the Senate bill and the GOP would also phase out extra help that many receive with deductibles and copayments.

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"I think there's some fine print," said Cori Uccello of the American Academy of Actuaries, a group representing professionals who make long-range economic estimates on health and pension programs. "Premiums are going down for a couple of reasons: the plans are getting less generous ... and the age distribution of people purchasing coverage would be younger."

The 2010 Affordable Care Act was intended to solve problems of access and affordability for millions of Americans who don't have job-based insurance. Instead, it's been a roller-coaster ride, and not only because of entrenched political opposition from Republicans.

Double-digit premium increases have hit many states. While consumers who get federal subsidies are insulated, several million are taking a direct hit: Those who buy individual policies outside the program, or make too much to get financial help. It's this group that some GOP lawmakers had in mind when they launched their self-proclaimed health care "rescue mission."

"It will bring affordability to people across this country who are suffering under the curse of high premiums, and high deductibles and high out-of-pocket costs," Sen. John Thune, R-S.D., said of the Senate GOP bill.

But Uccello and other experts caution that cost problems might just continue, only in a different form.

One longtime "Obamacare" critic says Republicans risk making some of the same mistakes that Democrats did with their original legislation.

Industry consultant and blogger Robert Laszewski says lawmakers should start over and try to design a system along the lines of the Medicare prescription drug benefit, a collaboration between the government and insurers that has solid bipartisan support, even if its cost to taxpayers is a problem.

"The way to fix insurance markets is to get a much higher sign-up rate and the Republicans are going in the opposite direction," said Laszewski.

Republicans "are not bringing costs down — they are only bringing the front-end premium down," added Laszewski. Healthy people looking at a plan with a $6,000 deductible might just decide to roll the dice and remain uninsured.

The Congressional Budget Office says insurance markets will be stable in most areas under current law or the Republican legislation. But trade-offs lurk beneath that 30,000-foot level assessment.

What's gotten most attention is the CBO's projection that at least 22 million fewer Americans would have health insurance under either Republican bill, the one that passed the House or the Senate version. A table at the end of this week's report delves into greater detail, looking at how costs would change for hypothetical individuals at different income levels in 2026.

Math alert: This example involves a few numbers.

Take a hypothetical 40-year-old making a modest $26,500 a year. Under current law, that person would face a sticker price of $6,500 a year for a standard "silver" plan. Premium subsidies would reduce the net premium to $1,700. Because of extra subsidies for deductibles and copayments, the plan would cover 87 percent of expected medical costs.

Under the Senate bill, the 40-year-old would see the sticker price silver plan premium drop to $6,400. But their premium subsidies would be significantly lower, and they'd end up paying $3,000. Caveat: It wouldn't be the exact same plan, because extra subsidies now provided for deductibles and copayments would be gone. The new plan would only cover 70 percent of expected medical costs.

What's the option?

The consumer could switch to a "bronze" plan, the new standard under the GOP bill. The sticker price would be $5,000, and after subsidies, the net premium would be $1,600. But the plan would only cover 58 percent of expected medical costs.

Some Republicans recognize they have more work to do.

"We've got to be able to help people with these very high expenses," Sen. Mike Rounds, R-S.D., said Wednesday. Maybe the standard plan should be more generous, he suggested. Or maybe older adults should get a break.